David, John, Matthew: (01)
[PT]
> I have only a dim understanding of finance, (02)
[MW]
> Clearly. (03)
[JS]
> I agree with Matthew. (04)
[PT]
> but I do recall a finance professor emphasizing the point that sunk
> costs are immaterial to future spending decisions. (05)
[DE]
> I remember the same idiotic "wisdom" from a finance professor or
> several. (06)
I have been justly slapped for trying to put a learned spin on the
folksy warning not to throw good money after bad. I now comprehend that,
while this bit of homespun prudence might work fine down on the farm,
once you land in a CFO's or CIO's office you are obliged on higher
principles to send piles of good new money after bad past investments.
Still it seems strange to me, but it does explain spending decisions
that might appear irrational to an unenlightened observer. (07)
I will rebrand and move the thread about app-specific OIDs vs. URIs over
to ontology-summit, as I believe that is where John's motivating
questions belonged. (08)
Regards,
--Paul (09)
On Wed, 2012-02-22 at 11:12 -0500, David Eddy wrote:
> Paul -
>
> On Feb 21, 2012, at 10:39 PM, Paul Tyson wrote:
>
> > I have only a dim understanding of finance, but I do recall a finance
> > professor emphasizing the point that sunk costs are immaterial to
> > future
> > spending decisions.
>
>
> I remember the same idiotic "wisdom" from a finance professor or
> several.
>
> Just because the rules of accounting/finance say so, does not make it
> so. Besides, information systems are things that live for decades as
> they accumulate a very complex, poorly understood infrastructure.
> These systems are VERY difficult to replace. I know one organization
> that has spent the past 10 years with a major outsourcing firm,
> replacing a core system with SAP. What this really means is that
> they will continue to run the old system in parallel for many years
> as they debug the SAP edition.
>
>
>
> Here's a nasty twist from such "professional logic"...
>
> The rules of FASB 86 (financial accounting standards board):
> • 1 - spending through proof-of-feasibility is expensed
> • 2 - system construction spending is capitalized & depreciated over
> 3 years
> • 3 - after completion maintenance/repairs are expensed
>
> The net result is that the 30+ year-old collection of legacy systems
> that run your business, that bring food to our table, is seen as an
> expense. As we know from the 2008 kerfuffle, expenses are bad.
> Expenses are to be cut when revenues go south.
>
> The information systems that make our lives possible—with running,
> clean water, dependable electricity, gas for our cars, spare parts
> for our cars, money in our bank accounts—are not assets on the
> balance sheet. They are expenses on the income statement to be
> reduced, reduced, reduced.
>
>
> This is relevant to lexicons/terminology thusly... if analysts/
> programmers had access to understandable language from their systems,
> the systems could be more effectively maintained. But currently
> either one spends years absorbing the language of the system, or one
> "simply" learns from scratch with every system.
>
> It is a totally human response to look at an opaque mess & decide to
> use your own language. And then your language is equally opaque to
> the next team that comes through.
>
> ___________________
> David Eddy
> deddy@xxxxxxxxxxxxx
>
> 781-455-0949
> (010)
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